Arbitrage funds: Lower risk than equities and similar tax treatment

However, remember that returns fluctuate between years

Mutual fund investors are showing keen interest in arbitrage funds as these schemes have received net inflows of Rs 23,796.5 crore between April and July 2023. While they are gaining in popularity — their assets under management (AUM) stood at Rs 90,745.6 crore as of July 31, 2023, according to data from the Association of Mutual Funds in India (Amfi) — experts point out that investors need to moderate their return expectations from these funds.

How do they work?

Managers of arbitrage funds track the cash and futures segment closely. The arbitrage strategy involves benefiting from the price differential between